The Bank of Japan stands out among central banks in developed countries. They are on the extreme dovish end, buying bonds at a rapid clip with no end in sight. That keeps the yen under pressure against its peers, with an occasional safe-haven flow.

But when we have a change in the fundamental of the BOJ’s dovishness, the yen reacts.

The Tokyo-based institution announced it would cut purchases of long-term 10-25 year debt from 200 billion to 190 billion yen and for the very long-term debt, above 25 years, from 90 to 80 billion yen.

The decision is relatively minor, but the mere move in the direction of cutting stimulus is taking its toll on the pair. USD/JPY dropped to 112.50 before bouncing back to 112.70 at the time of writing. It is nearly 70 pips lower on the day.

While the number of pips isn’t huge, it is important to remember that USD/JPY has been a very slow-moving pair. This knee-jerk reaction is the biggest move in a month.

Will dollar/yen continue falling? A lot depends on bigger announcements by Kuroda and co. which in turn depend on price development. Despite huge efforts to lift inflation, it remains very low, no matter how it is sliced and diced.

About Author

Yohay Elam – Founder, Writer and Editor
I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.
Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.
Yohay's Google Profile

Comments are closed.

Top Brokers

About ForexCrunch

rex Crunch is a site all about the foreign exchange market, which consists of news, opinions, daily and weekly forex analysis, technical analysis, tutorials, basics of the forex market, forex software posts, insights about the forex industry and whatever is related to Forex.

Disclaimer

Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment / deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information.